BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2249|
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THIRD READING
Bill No: AB 2249
Author: Buchanan (D), et al.
Amended: 8/22/12 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 10-0, 7/3/12
AYES: Padilla, Fuller, Corbett, De Le�n, DeSaulnier,
Kehoe, Pavley, Rubio, Strickland, Wright
NO VOTE RECORDED: Berryhill, Emmerson, Simitian
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/16/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 69-9, 5/30/12 - See last page for vote
SUBJECT : Solar Water Heating and Efficiency Act of 2007
SOURCE : California Solar Energy Industries Association
DIGEST : This bill expands eligibility for incentives
under the California Solar Initiative (CSI) thermal program
to include multifamily residential, governmental,
educational, and nonprofit solar pool heating systems.
ANALYSIS : Existing law establishes the CSI, a $3.6
billion program which provides incentives for the
installation of solar photovoltaic and solar thermal
systems for customers of the state's investor-owned
utilities (IOUs) and publicly owned utilities. The measure
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allocated $100.8 million for solar thermal technologies
that displace electric use.
Existing law establishes the Solar Water Heating and
Efficiency Act of 2007 to provide incentives for customers
of IOUs to displace their natural gas use by installing
solar water heating (SWH) systems under the California
Solar Initiative-Thermal (CSI-Thermal) program and funded
by $250 million in ratepayer surcharges.
Existing law defines "solar water heating systems" as any
solar energy device that has the primary purpose of
reducing demand for natural gas through water heating,
space heating, or other methods of capturing energy from
the sun to reduce natural gas consumption in a home,
business, or any building receiving natural gas that is
subject to the surcharge and that meets or exceeds the
eligibility criteria and specifically excludes solar pool
heating systems.
This bill:
1. Requires the Public Utilities Commission (PUC) to (a)
determine an appropriate division of funds between SWH
systems and solar pool heating systems (b) complete a
review of whether the rebate levels established by the
PUC will be sufficient to spur investment to reach the
goals of the program and to report the results to the
Legislature by no later than February 1, 2014 and (c)
direct gas corporations or third-party administrators to
implement the program changes made by this bill no later
than July 1, 2013.
2. Provides that the SWH system incentives should be a
cost-effective investment by gas customers. Gas
customers will recoup the cost of their investment
through lower prices as a result of avoiding purchases
of natural gas.
3. Provides that this Act will encourage the cost-effective
deployment of solar heating systems in both residential
and commercial markets and in each end-use application
sector in a balanced manner. It is the intent of the
Legislature that the PUC monitor and adjust incentives
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created by the article so that they are cost-effective
investments sufficient to significantly increase markets
and promote market transformation.
4. Provides that the PUC ensure that increased, uniform
growth in each market sector is achieved through program
incentives or structure adjustments that prevent
overutilization of program resources by any single
sector.
Background
CSI . In January 2007, the PUC launched the CSI, a $2.16
billion ratepayer-funded incentive program with a goal of
installing 1,940 megawatts of new solar generation and
creating a sustainable solar industry by 2016.
In early 2006, the PUC, in collaboration with the
California Energy Commission, established the CSI, a $2.5
billion incentive program to promote solar development
through 2016, to be funded from the distribution rates of
gas and electric ratepayers. At that time, the PUC stated
its intent to consider incentives for SWH as part of the
CSI program, and directed San Diego Gas and Electric
Company (SDG&E) to contract with California Center for
Sustainable Energy to administer a pilot program for SWH
incentives in the SDG&E territory. Subsequently, with the
passage of SB 1 (Murray), Chapter 132, Statutes of 2006, in
August of 2006, funds for CSI were limited to $2.16 billion
and could no longer be collected from gas ratepayers. At
the same time, SB 1 included a provision allowing $100.8
million of total CSI funds to be used for incentives for
solar thermal technologies, such as SWH. With CSI funding
now limited to collections from electric ratepayers, the
PUC concluded that although CSI would include as part of
its total budget $100.8 million for incentives to solar
thermal technologies, CSI should only pay incentives to
solar thermal technologies that displace electric usage.
The SWH pilot in the SDG&E territory, budgeted at $3
million, was allowed to proceed to provide useful
information on SWH incentives in general. In February
2007, the PUC approved the SWH pilot budget of $2.59
million and the pilot began operation in the SDG&E
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territory, with a scheduled end date of December 31, 2008.
The PUC later extended the pilot to December 31, 2009 or
until the budget was exhausted, whichever occurs first.
In late 2007, the Legislature adopted AB 1470 (Huffman),
Chapter 536, Statutes of 2007, which authorized the
creation of a $250 million incentive program to promote the
installation of 200,000 SWH systems in homes and businesses
that displace the use of natural gas by 2017. The statute
required the PUC to evaluate data from the SWH pilot and
determine whether an SWH program was "cost effective for
ratepayers and in the public interest" before designing and
implementing an incentive program for gas customers.
In early 2010 the PUC established the CSI-Thermal program
to provide incentives to promote the installation of SWH
systems in the territories of Pacific Gas and Electric
Company, Southern California Edison, SDG&E, and Southern
California Gas Company. The CSI-Thermal program was funded
by $250 million in collections from gas ratepayers,
pursuant to AB 1470 and up to $100.8 million in CSI for
solar thermal projects such as SWH. Monies collected under
AB 1470 from gas ratepayers fund incentives to SWH that
displace natural gas usage, while funds collected through
CSI from electric ratepayers will fund electric displacing
SWH systems. The single-family residential program was
launched in May 2010, the commercial/multi-family program
in October 2010, and the low-income program in March 2012.
Program goals . The CSI-Thermal program is designed to
significantly increase the adoption rate of SWH
technologies in the California marketplace. The program
strategy and design principles are intended to address the
barriers to growth, namely installation costs, lack of
public knowledge about SWH, permitting costs and
requirements, and a potential shortage of experienced
installers. The primary goals of the CSI-Thermal program
include the following: (1) significantly increase the size
of the SWH market in California by increasing the adoption
rate of SWH technologies; (2) support reductions in the
cost of SWH systems of at least 16% through a program that
increases market size and encourages cost reductions
through market efficiency and innovation; (3) engage in
market facilitation activities to reduce market barriers to
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SWH adoption, such as high permitting costs, lack of access
to information, and lack of trained installers; and (4)
increase consumer confidence and understanding of SWH
technology and its benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee, $166,000
from the Public Utilities Reimbursement Account in 2012-13
and 2013-14 to the PUC to implement expanded program
eligibility requirements.
$120,000 annually beginning 2014-15 to monitor the
program and ensure that the new requirements are met by
the utilities' program administrators.
Unknown, likely major accelerated CSI-Thermal program
expenditures annually.
SUPPORT : (Verified 8/22/12)
California Solar Energy Industries Association (source)
All Valley Solar, Inc.
AMECO Solar
Aquatherm Industries
Aztec Solar, Inc.
California Park and Recreation Society
California State Association of Electrical Workers
California State Pipe Trades Council
City of Sacramento
City of Santa Monica
Coalition for Adequate School Housing
Coalition of California Utility Employees
County School Facilities Consortium
East Bay Municipal Utility District
Environment California
FAFCO Solar Water Heating
Los Angeles Unified School District
Pacific Gas and Electric Company
School Energy Coalition
Sierra Pacific Home and Comfort, Inc.
Skyline Innovations
Solar Electrical Systems
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Sun Light and Power
Suntrek Industries, Inc.
UMA Solar
Western States Council of Sheet Metal Workers
ARGUMENTS IN SUPPORT : Solar Electrical Systems supports
this bill, which helps schools, municipalities and other
large swimming pool owners install solar for pool heating.
Operators of these swimming pools are faced with enormous
heating bills in order to maintain the pool at usable
temperatures, and this bill would make available existing
funds for SWH systems to help owner/operators purchase
these systems. Solar pool heating saves very large amounts
of natural gas, thereby saving money while also avoiding
the release of significant amounts of air emissions. Also,
more than 85% of California's natural gas comes from out of
state; installing solar for swimming pools will help keep
those dollars here in California, creating local workforce
jobs.
ASSEMBLY FLOOR : 69-9, 5/30/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Eng, Feuer, Fong, Fuentes, Furutani, Beth Gaines,
Galgiani, Gatto, Gordon, Gorell, Hagman, Hall, Harkey,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Jeffries, Knight, Lara, Bonnie Lowenthal, Ma, Mendoza,
Miller, Mitchell, Monning, Nestande, Nielsen, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Wagner, Wieckowski,
Williams, Yamada, John A. P�rez
NOES: Donnelly, Garrick, Grove, Halderman, Jones, Logue,
Mansoor, Morrell, Norby
NO VOTE RECORDED: Fletcher, Valadao
RM:k 8/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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